Public Option Vs. Single Payer

Q: What is the difference between a "public option" and a single-payer plan?

A: Single-payer is a complete government-run health insurance system under which everyone is covered, e.g., Canada’s system. The "public option" is a single federal insurance plan that would compete with private insurance companies.

FULL QUESTION

Please explain to me in very simple terms what "public option v. single payer plan" regarding health insurance means. I am completely lost on this issue and am having a difficult time trying to get the fact straight from all sources. Your help is greatly appreciated. Thank you in advance for your help and understanding.

FULL ANSWER

The so-called "public option" has taken several forms in several different health care bills this year in Congress. All of the proposals, however, would create a federal health care plan, something like Medicare, but for persons under age 65. Individuals and small businesses would be able to buy such a plan just as they would purchase a health care plan from a private insurance company.

Proponents of a public option say it would create more competition for the private companies, holding prices down for everyone. Opponents say that private insurance companies would have a hard time competing against the public option, which they say would be less expensive and would eventually drive private companies out of business.

In theory, a public plan could be unfair competition if granted the power to force doctors, hospitals and other providers to accept payments that are far below what private insurance plans pay. But analyses of the leading bills that have emerged predict that only a small percentage of Americans would actually take up the public health insurance plan.

The Senate has now ditched a public option completely, and the House bill structures its version of a public option in such a way that its premiums would likely be "somewhat higher" than those of private companies, according to an analysis by the Congressional Budget Office. The plan would pay health care providers at negotiated rates, not at substantially lower Medicare rates. Plus, the CBO predicts that the plan would attract less healthy individuals. Furthermore, the public option wouldn’t be available to everyone, at least not at first. By the third year of implementation of the bill, the public plan would be available only to individuals who buy coverage on their own and to small businesses with 100 or fewer employees. Those businesses and individuals would be eligible to buy coverage through the "insurance exchange," which would include several private plans and the public option. Larger employers could become eligible to buy plans through the exchange at the discretion of a "health choices commissioner."

If this type of public option were open to everyone, health care experts at the Lewin Group estimated that it would attract 20.6 million people, 12.5 million of them moving off of private insurance. (The Lewin Group, whose studies have been cited by both political parties, is a subsidiary of UnitedHealth Group but says it operates with "editorial independence.") The CBO analyzed the latest House bill specifically and predicted that only 6 million would join the public option. For more on the impact of the House bill’s public option, see our earlier report.

The public option is drastically different from a single-payer health care system. Under a single-payer system, everyone in the country would have health coverage provided by the government, and private insurance largely would cease to exist. Like Medicare, the government would act as the insurer; doctors and hospitals would operate privately, receiving payments from public funds under such a nationalized health insurance system. (The group Physicians for a National Health Program provides details on how it believes such a system would operate in the U.S.)

Advocates of a single-payer system havecomplained that they (and their views) have been largely excluded from the health care debate in Congress and in the White House.